Forget stocks, P2P lending and cryptocurrencies: learning is the ultimate investment

Having spent most of my career freelancing or working at small companies, I spent my 20s happily ignoring words like “retirement” and “pension plan” . Nothing made me want rebel more than those wise words: “you should probably see a financial advisor”.

“Global capitalism is bound to disintegrate one of these days” was my usual retort. “Information technology will bring us zero-marginal-cost production, and usher in a post-capitalist global society”, I’d continue, having enthusiastically read the synopsis of Paul Mason’s Postcapitalism.

But in late 2015 I finally sold out, and organised meeting with a financial advisor. I left our meeting singing Chris Wood’s None The Wiser:

I just had an hour with their financial advisor
He’s a nice chap but I’m none the wiser

Happily, I returned to a state of blissful ignorance for a year or so.

Early 2017 brought fear and panic. Far from fully automated luxury communism, the “best case” future suddenly looked a lot more like retiring aged 85 with no National Health Service. Never mind though, there’ll be incredibly immersive VR to escape from the hellish inequality of it all!

Full of terror, I skipped the financial advisor and decided to learn about the murky world of investing on my own. Ugh. It was either that, or watch my savings sit in cash ISAs “earning” 0.1% interest. My approach was to read as much as possible. Mostly: Google, money sections from national newspapers, MoneySavingExpert, Mr Money Mustache and James Altucher (start here: “The Ultimate Cheat Sheet For Investing All of Your Money”). Oh, and I spoke to some friends who had investment banking backgrounds (who all turned out to be deeply sceptical about investing altogether).

Turns out that the world of investment has even more jargon and acronyms than computer science. ETFs, SIPPs, ISAs, LISAs, P2P, CAPE (cyclically adjusted price-to-earnings ratio, if you were wondering), yield, value stocks, growth stocks, active funds, passive funds, bonds, junk bonds and asset-backed securities. It just goes on and on and on.

Really, the best way to learn about any of this nonsense is to put a tiny amount of money into something. Anything. It’s just not possible to give a shit until you’re watching your own money go up, down or disappear. Reassuringly, once I got through the first wave of jargon I began to realise that the fundamental concepts are pretty simple — a bit like computer science, really.

Whatever I read, one thing kept coming back — and it had absolutely nothing to do with money at all: invest in yourself, and never stop learning. All of the above sources mentioned it, and I particularly enjoyed how Warren Buffett put it:

Generally speaking, investing in yourself is the best thing you can do. Anything that improves your own talents; nobody can tax it or take it away from you. They can run up huge deficits and the dollar can become worth far less. You can have all kinds of things happen. But if you’ve got talent yourself, and you’ve maximised your talent, you’ve got a tremendous asset that can return ten-fold.

Even learning about investing had a solid return for me. I revisited my financial advisor’s 2015 quotation for the following “next steps”:

  • Setting up of both an ISA and a pension
  • Research & recommendation of plan for actively managed funds
  • One fact find meeting
  • One recommendation meeting
  • Suitability report
  • Cost: £1000 (est. 20–25 hours work)

Instead, this is what I did by myself:

  • Learnt that the only honest investment advice is: “I don’t know”. People who don’t say that are lying
  • Set up my own ISA and pension anyway
  • Learnt that actively managed funds (especially those the 2015 financial advisor suggested) are probably bad investments, and chose low cost index funds instead (I don’t know if I’m right, but it made most sense to me).
  • Experimented with things the advisor never even mentioned: P2P and cryptocurrencies (I don’t know if this will work out, but I wanted to learn about it)
  • Cost: £0 (est. 16 hours of researching and setting up accounts)

So I saved £1000, and now I know all about the nasty world of investing.

Something we like to say at Decoded really rings true: if you outsource the doing, you outsource the thinking. And I can’t think of someone I trust less to make careful decisions about my money than a financial services professional — so from now on, I’ll be doing it myself.

Of course, I’m still holding out for automated luxury communism.